Grayscale's Spot Bitcoin ETF is Rejected by the US Securities and Exchange Commission

The US Securities and Exchange Commission (SEC) on Wednesday rejected Grayscale, one of the world's largest digital asset managers,' proposal to list a spot bitcoin exchange-traded fund (ETF) on the NYSE Arca exchange. Grayscale responded by filing a legal challenge to the decision, the latest in a string of rejections of proposals for spot bitcoin ETF listings in the United States over the past year.

The Securities and Exchange Commission (SEC) stated in a filing that the proposal to list the ETF did not meet the standard designed to prevent fraudulent and manipulative practises and protect investors and the public interest. Grayscale proposed the ETF as an evolution of its Grayscale Bitcoin Trust. NYSE Arca is owned by Intercontinental Exchange Inc.

The SEC stated that its decision was not based on "a determination of whether bitcoin, or blockchain technology in general, has utility or value as an innovation or an investment." Grayscale responded by filing a lawsuit against the regulator, claiming that the SEC violated the Administrative Procedure Act and the Securities Exchange Act.

In a statement it pointed to the SEC's approval of ETFs based on bitcoin futures. "If regulators are comfortable with ETFs that hold derivatives of a given asset, they should logically be comfortable with ETFs that hold that same asset," it said.